If you decide to register an offshore company in Panama, you will be able to do business in the country while enjoying tax incentives, full commercial confidentiality, and asset protection guaranteed by the government. So if you are considering company formation in Panama, establishing an offshore company could be a great overseas expansion option that should help you to increase profitability.
Panama has experienced decades of economic and political stability, with 15 years of continuous and exponential growth seeing gross domestic product (GDP) hit $68.5 billion in 2019 (all figures in USD). Meanwhile, a similar rise in foreign direct investment (FDI) saw it reach $6.07 billion the same year. The Central American nation offers foreign investors a business-friendly environment, highlighted by its score of 92.0 for ease of doing business, as indicated in the World Bank’s Doing Business 2020 report. In addition, Panama is the country that receives the most FDI in Central America, according to the most recent World Investment Report.
This country with a population of 4.24 million has a strategic geographic location, acting as the bridge between the rest of Central America and South America. It is also home to the famed Panama Canal — an artificial waterway that links the Atlantic Ocean with the Caribbean Sea, through which approximately 14,000 ships transit each year, directly generating approximately 10% of the country’s GDP. Panama’s prime exports are refined petroleum, coal tar oil, and ships. The country’s main export destinations include China, Ecuador, Guatemala, the Netherlands, and the United States.
If you are considering doing business in Panama, read on to learn how to register an offshore company in Panama, or go ahead and contact us now to discuss your business options.
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Register an offshore company in Panama: what does it mean?
An offshore company in Panama refers to a legal entity that operates in the country but does not profit from its local activities. In other words, it is a company that carries out administration and management operations in Panama, but whose economic income is generated by subsidiaries located in other countries.
Business executives looking to register an offshore company in Panama often seek to reduce their tax burden and benefit from the country’s Territorial Tax System, which allows them to receive income from other countries without having to pay taxes.
Note that you will not be penalized if you decide to change the type of company from offshore to onshore once your company is operational.
Main benefits of forming an offshore company
Some of the main benefits of registering an offshore company in Panama include:
Financial confidentiality: The local financial industry offers its clients absolute confidentiality about their business transactions, which means that your financial goals do not have to be published in your company’s articles of incorporation. In fact, the exposure of financial data by third parties is punishable by law.
Quick market entry: Compared to other types of legal entities, you can register an offshore company in Panama in just seven business days, allowing you to start business operations quickly.
Absence of exchange controls: Panama does not impose foreign exchange controls on offshore organizations. In addition, the country’s official currency is the US dollar, which can ease commercial transactions significantly.
Tax benefits: While not generating local revenues and therefore not being liable for local taxes, your offshore organization only needs to pay an annual flat fee of $300 to be able to operate.
How to register an offshore company in Panama?
The process of registering an offshore company in Panama is not only fast, at seven business days, but also straightforward, with four key steps involved:
1. Draft the company bylaws and authenticate then before a public notary
The first step to register an offshore company in Panama is to draft the bylaws of your organization and authenticate them before a public notary. To do this, you must decide the type of company you want to establish in the country, as well as the name, commercial activity to develop, and operating time.
2. Register your company before the Public Registry of Panama
Register the statutes of your company with the Public Registry of Panama. This public entity will evaluate that the statutes meet the minimum requirements established by local legislation.
3. Obtain a tax ID
Register your company with Panama’s tax authority, the Directorate General of Income (DGI), and request a tax ID for your organization, which will be necessary to comply with your tax obligations.
4. Open a corporate bank account
The last step to register an offshore company in Panama is to open a corporate bank account to manage the finances of your newly created company and organize your accounting records. Once this is done, your offshore company will be able to legally operate in the country.
Register an offshore company in Panama with the help of Biz Latin Hub
At Biz Latin Hub, our team of multilingual company formation agents has ample experience helping business executives to register an offshore company in Panama and is equipped to ensure a fast and safe market entry. With our complete portfolio of high-quality commercial representation, legal, HR, and accounting services, we can be your single point of contact to establish a commercial presence in Panama, or any of the other 15 countries across Latin America and the Caribbean where we are present.
Reach out to us now for personalized assistance or a free quote.
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